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Norway Must Prepare for End of Oil, Gas: Climate Body

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Norway’s climate change committee said today the government should begin to prepare for “the final phase of Norwegian petroleum activities,” recommending a number of far-reaching measures including an immediate halt to exploration and extraction permitting.

The committee, which is tasked by parliament to review choices to get the country to its target of reducing greenhouse gas (GHG) emissions by at least 50pc by 2030 compared with 1990 levels, said in a report that upstream policy “must be changed” and that Norway “must reduce the extent of petroleum extraction towards 2050 more than what is in current expectations.”

It noted that the oil and gas industry accounts for 25pc of the country’s total emissions, and said “the higher the level of activity in the oil and gas industry, the more the emissions in other sectors must be reduced” if Norway is to hit its 2050 goal.

Norway is Europe’s biggest liquids producing country and a major gas supplier, with the hydrocarbons sector contributing around 20pc of gross domestic product (GDP) in the past five years. But the committee said today that “activity is no longer expected to be as large a growth engine towards and beyond 2030.”

It recommended that no further permits for exploration, extraction, or construction and operation are granted until the government has a strategy in place for the “final phase,” that there is a permanent halt in exploration without direct connection to existing infrastructure, and that “no decision is made to build new infrastructure that binds us to emissions towards and beyond 2050.” It also said price drops or cost increases for the oil and gas industry “are handled without compensatory measures of a business policy or tax nature,” as they were during the pandemic-induced price falls of 2020.

Those tax incentives resulted in a surge of plans for development and operations in the country’s upstream. The committee said “an expectation of such political packages provides unfortunate incentives and makes the transition more difficult both for the petroleum industry and other industries.” It recommended that all costs of climate measures in the sector are borne, “as far as possible” by companies that operate there, and said powering offshore infrastructure from land — a key part of some operators’ plans to reduce emissions — should stop.

“It can be seen as a paradox if scarce renewable energy resources should be prioritised for businesses that extract fossil resources that contribute strongly to the climate challenge, and which are also expected to be phased out in a low-emissions world,” the committee said.

In response, industry body Offshore Norway said while it agreed that emissions must be reduced “it would not make sense for Norway to stop looking for oil and gas.”

The committee’s report will feed into the government’s required updated climate targets, but is not binding.

Source: Argus Media

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